1. The Field of the Invention
The present invention relates to systems and methods for linking a financial card with a merchant account. More particularly, the present invention relates to systems and methods for enabling entities that do not have a bank account to accept financial cards as payment by linking a financial card with a merchant account.
2. Background and Relevant Art
Financial cards come in a variety of different types from traditional credit cards and debit cards to stored value cards. Issuers and acquirers that are members of an association or jointly owned corporation make it possible for these types of financial cards to be used to make payments. The association is an entity that administers and promotes financial cards. Some associations promote one or more brands of financial cards. Issuers are usually financial institutions that issue cards to individuals or entities (businesses) that thereby become cardholders. Acquirers maintain relationships with merchants that enable the merchants to accept financial cards from cardholders.
Today, using a financial card in a transaction requires a person to establish a relationship with an issuer and become a cardholder. Becoming a cardholder is a process that is well known to a large number of people and many people receive solicitations to become cardholders almost every day. Generally, a person completes a simple application and provides the completed application to an issuer. In the case of an application for a credit card, the issuer examines the credit of the applicant, establishes a credit limit, and issues a card to the person. After the cardholder receives his or her card from the issuer, the cardholder can use his or her card to purchase goods and/or services as long as the merchant accepts that particular card.
After people become cardholders, they are able to use their cards in financial transactions to make payment. While people are able to use their cards to purchase goods/services, they are unable to accept cards as payment in similar transactions. The ability to accept cards as payment requires the person accepting the card to have a merchant account with an acquiring financial institution. Unfortunately, merchant accounts are only available to businesses that become merchants as defined by the association. To accept cards and become a merchant, the business must establish a relationship with an acquirer that enables the business to accept cards in the business's transactions. This is primarily accomplished through a merchant account that the acquirer establishes for the business that qualifies as a merchant.
To obtain a merchant account with an acquirer and become a merchant, the business is often asked to provide details regarding their business practices. The business is often required to describe the goods and services being sold as well as how the goods and services are delivered to customers. With this information, the acquirer assists the business in identifying a card processing system that best serves the needs of the business.
Obtaining a merchant account and becoming a merchant also require the business to have an account at a financial institution where funds can be deposited. The association is responsible for debiting the funds from the issuer's Bank Identification Number (BIN) account and depositing the funds into the acquirer's BIN account. For this reason, a merchant is required to have a settlement account at a financial institution where the funds can be deposited. A typical example of a settlement account is a checking account or a savings account at a bank. The settlement account must be accessible to the acquirer through the use of the automated clearing house (ACH) network and the business provides an account routing number and an account number. If the business does not have an account, then the business cannot obtain a merchant account and is therefore unable to accept cards as payment for their goods and services and does not qualify as a merchant as defined by the association. Usually, a merchant account is not created unless the prospective merchant can identify an account for receiving funds.
Thus, businesses often have difficulty in obtaining a merchant account with an acquirer, but the inability to procure a merchant account with an acquirer is also problematic to a significant number of individuals. As previously indicated, one of the problems faced by individuals is that merchant accounts require that the individual be a merchant. Even if individuals could overcome this obstacle, some individuals would not qualify to become merchants because they do not trust financial institutions and do not have an account with any financial institution. These individuals, as well as businesses that do not have a settlement account with any financial institution, are therefore unable to obtain a merchant account even though they may prefer to accept financial cards as payment. Other individuals or businesses would like the ability to have accessible funds without having to go to the bank and deposit a check and/or make a withdrawal.
Many attempts have been made to make funds more accessible to individuals who do not have an account with a financial institution. Payroll cards, for example, are cards whose value is tied to the user's payroll. Instead of issuing a check, the available balance of the payroll card is increased. This does not, however, enable the holder of the payroll card to accept credit cards, debit cards and other financial cards as payment.